Opening Up to SaaS

As the second global CIO in the history of Dana Holding Corp., which is more than 100 years old, Doug Tracy has a big job ahead of him.

The auto parts supplier has struggled in the economic downturn, so a priority is cutting costs. But Tracy, who joined Dana in April, also has to build for the future, and he thinks demand in the auto industry has finally bottomed out.

"The challenges make it someplace where you can have an impact," he says. "Also, when I look at what we have, it's in-house for IT. We've not mortgaged the home to a big outsourcing vendor, so that gives me the flexibility to shape the organization. I saw that as a great opportunity as well."

After years of acquiring companies with the idea of diversifying its holdings, Dana is now trying to centralize and standardize, and that includes IT.

Tracy has been holding "very pointed discussions" with technology vendors, he said, telling them that in order to get or keep Dana's business, they need to look past what they'll get from Dana next quarter.

"It's like walking into the emergency room and lying on the floor complaining of chest pains," he says. "There are people who will treat you, and then there are people who want to see if you have your insurance card before they decide to do anything."

He is also trying to find lower cost alternatives to the big vendors--companies and technologies that may not be included in Gartner's famous "magic quadrant." One such technology is software as a service (SaaS), which is appealing, he says, because you pay as you go without requiring a big purchase of hardware and software.

But Tracy is also wary of SaaS because there might be problems integrating SaaS projects into the rest of Dana's systems. "[Some SaaS vendors] will continue to do their own patching and upgrading, and they're not set up to do custom interfaces to your system," he says. "You have to be cognizant. There might be data you want out of that system that doesn't come through that interface."

So he will treat SaaS as good for filling a "point need"--something that's not critical to the company's operations.

Another technology he's been considering is open source. Nearly all companies use it in some way, he says--like running clusters of Linux and keeping Web environments on Apache servers--but he's been disappointed so far at the dearth of vendors making open-source infrastructure tools, nor is he impressed with what he's heard about open-source office products.

Tracy would buy open-source infrastructure tools--something that does infrastructure monitoring, for instance, or capacity management--because they'd save him money. But if the tools didn't work, Dana's customers would still be protected. "If they fall over, we keep the mess in-house," he says.

Open-source office, on the other hand, would have to work very well before he'd consider using it. He's heard from a colleague at another company that its open-source office project wasn't going very well. "If you're CIO, and you're answering the phone on why a spreadsheet doesn't work, that takes the conversation to a whole different level than you'd like to have," he says. "When it touches a lot of people, my risk tolerance is pretty low."

Ultimately, Tracy figures he can't let the bad economy dictate his strategy. In certain areas, Dana is hiring and expanding, and those areas will also be a focus for IT.